Photograph — abokiFX News

Every sector of Nigeria’s economy suffered a devastating impact from the naira devaluation that hit the country this year. The telecom industry was not left out as the two major players had their fair share of the economic downturn.

MTN Nigeria Communications Plc and Airtel Africa Plc have recently disclosed a combined foreign exchange loss of N479.11 billion, which can be attributed to the devaluation of the naira that took place in June.

In its nine-month financial report for the year, MTN specifically reported a foreign exchange loss of N232.8 billion linked to its net foreign currency liabilities due to the naira devaluation. The naira had dropped from 461/$1 in December 2022 to 777/$1 in September 2023.

MTN highlighted that its foreign exchange loss during the same period in 2022 was significantly lower at N27.9 billion. “Our recognised forex loss for the nine months to September 2023 was 77 percent higher than the amount reported in H1 2023, where we measured all the trade lines after offsetting the naira-denominated cash cover that was provided to the banks. Following further analysis and review, we have remeasured all our trade lines to correctly exclude the naira-denominated cash cover that was provided to the banks.”

Meanwhile, Airtel reported an after-tax foreign exchange loss of $317m. “Loss after tax was $13m driven largely by a foreign exchange loss of $471m recorded in finance cost before tax and $317m after tax because of the devaluation of the Nigerian naira in June 2023. This impact has been classified as an exceptional item.”

Despite the drop in earnings, the telecom companies showed resilience which was evident from the growth in data revenue fueled by the increase in data consumption by their customers.

In the third quarter of 2023, MTN and Airtel experienced robust growth in their data service revenue, which increased their earnings to N403.2 billion. MTN reported N279.5 billion in data revenue between July and September this year. And it’s not surprising considering that MTN is Nigeria’s leading telecom provider in terms of subscribers. It generated N279.5 billion in data revenue between July and September, marking a 38.9% increase compared to the same period in the previous year.

“Our 4G network now covers 80.5% of the population, up from 79.1% in December 2022. Data usage (GB per user) grew by 29.1% to 8.6GB, and the number of smartphones on our network increased by 7.6%, bringing smartphone penetration to 53.4%, up 1. Consequently, we recorded a 46.3% growth in data traffic, with the 4G network accounting for 83.7% of the total traffic,” said CEO of MTN, Karl Toriola.

Airtel Nigeria reported N123.7 billion ($157 million) in earnings from data subscriptions, a 29.3% increase in data revenue.

“Airtel Nigeria’s data revenue grew by 29.3% in constant currency, driven by data customer base growth of 17.4% and data Average Revenue Per User (ARPU) growth of 12.3%. Data usage per customer increased by 23.8% to 5.9GB per month (from 4.8GB in the prior period),” noted Segun Ogunsanya, CEO of Airtel.

The devaluation of the Naira contributed to rising inflation, which further affected the companies’ operating costs. Inflation led to increased prices for goods and services, including fuel and energy, critical for the functioning of telecom networks. Most of their infrastructure and equipment, including imported technology, are priced in foreign currencies. With the Naira losing value, these companies had to spend more to acquire the same equipment and services, thus driving up their operational expenses.

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